Afternoon all,For anyone interested, the interview below is a...

Afternoon all,
For anyone interested, the interview below is a pretty good overview of Malachite.

Malachite (MAR) In a Nutshell:
Malachite is a listed Australian resources company that aims to build shareholder wealth by the discovery and development of high grade gold, silver and base metal deposits in eastern Australia, a region known to be highly prospective for all three of these metals. To date, most of the company's exploration effort has been applied in New South Wales, but some work has been completed in Queensland and more is anticipated in the near future. It is the company's intention to remain unhedged to the fullest extent possible, so as to retain maximum leverage to the prices of gold and silver. Malachite's exploration activity is focussed on gold and silver in eastern Australia.

Below is the transcript of an interview by the Wall Street Reporter with Garry Lowder, MAR's Managing Director. (The audio link is at the bottom of the page)

PLEASE NOTE THE DATE: EARLY APRIL, 2004

Wall Street Reporter (WSR): Could you start with an overview of the company?

MAR: I founded Malachite Resources early in 1997 with seed capital provided by a few friends and myself. When we started the company, we set out to explore for gold and base metals in eastern Australia where we were going to target narrow high-grade lode-type deposits and large tonnage porphyry-style deposits, both of which really are very typical of the deposits in eastern Australia. We wanted to differentiate ourselves somewhat from other junior resources by targeting eastern Australia and working on these target types. It was our intention to list the company within two or three years, but as many people know, by late 1997 the resources industry went into quite a severe downturn, which is in fact, the worst I can remember in my nearly 40 years in the business. So we had to shelve our IPO plans for awhile. Even so, we continued to raise capital and got on with the task by testing and looking at a number of copper and gold projects in both New South Wales and Queensland. Very early on we acquired the Tooloom gold project in northern New South Wales. Tooloom is something quite special. It’s a major gold field that for various reasons had escaped modern exploration until we came along, and it soon became and really remains today, our cornerstone project. In 1999, the major international mining group Billiton took an equity stake in the company and over the next couple of years they funded us to drill three of our copper prospects. Billiton is still there, although today of course it’s BHP Billiton, following that merger. They hold about 6% of our stock and perhaps more importantly, there is a strategic alliance in place between the world’s largest mining company and perhaps one of the smallest. That alliance is generating a lot of value to Malachite.
We finally listed on the ASX in November 2002 after adding silver to our portfolio, recognizing the potential for silver to generate a lot of investor interest. That part of our portfolio is mainly represented by the Conrad Silver Mine, which is also in northern New South Wales. It’s a former mine that last operated in 1957. Since we listed, we’ve added tin to our portfolio by taking an option over the old Elsmore tin mine, which is about 25 kilometers away from our Conrad project. So today, these three projects, Tooloom gold, Conrad silver and Elsmore tin, are the core assets of the company. As it stands now, we have just under 40 million shares listed. The shares are trading at around 26 cents or just on 20 cents US and the options are 11 cents. People who invested at our float in late 2002 are currently sitting on a paper profit of about 60%, so they’re fairly happy chappies.

WSR: Perhaps you could expand a bit more on these projects and properties. Give us a better feel for where you are in terms of exploration, studies, sampling, drilling, etc.

MAR: Tooloom is our key project. It’s the one most likely to re-rate Malachite Resources in the eyes of investors. We own it 100% and, in fact, we hold around 300 square kilometers of prime prospective ground. The interesting thing about Tooloom is that it is located in what, from a prospecting or an exploration point of view, is an unfashionable, forgotten corner of the state. In fact, it was not even recorded as a gold field on published government maps until after we became involved and very little was known about it in terms of its exploration potential. This was the case in spite of the fact that in the 1860’s up to 10,000 people were mining alluvial gold in the Tooloom Valley. But that was before the Mines Department was created so there was no real government record of what was going on. When the “easy” gold ran out, the diggers downed tools at Tooloom and headed north to a new discovery, Gympie, about 250 kilometers away in Queensland. And Tooloom seemed to slip into obscurity from that time on until we came along in 1997. Since then, we’ve been conducting a very intensive exploration program. Starting at the grassroots stage, we’ve now generated numerous targets scattered over an area of more than 100 square kilometers. Some of these targets are of lode-type and some are of large-tonnage porphyry type. In the latter case, we conducted a drilling program of one of these we call Phelps, just last December, and reported long intercepts of low-grade, but very consistent gold mineralization. These results really suggest that we are looking at a major gold system and all the work we’ve done since then has only confirmed that. In fact, it has shown that our initial drilling was only testing the northern edge of a system, an area of three or four square kilometers. So we’re keen to get back in there and start drilling again and we’ll be doing so before the end of April.

Then we have another nine or 10 prospects at Tooloom that are also ready for drilling. For example, just five kilometers to the south of Phelps is another system we call Joe’s Gully that appears to be quite similar. In Joe’s Gully itself, we’ve seen lots of gold nuggets, which are shedding from the adjoining slopes. When you look at these nuggets closely you can see they’re actually composed of pieces of gold intergrown with quartz. In other words, they’re just bits of ore eroded from the outcrops and dropped into the bottom of the canyon. Then if you go another six kilometers south of Joe’s, we have another prospect where you can literally see gold shining in the sun in the outcrops.

So, Tooloom is a highly mineralized area. It’s basically a forgotten gold field that we’ve re-discovered and it’s no wonder that we have two of the world’s largest miners knocking on the Tooloom door.

Our silver project, Conrad, which we also hold 100%, is an old mine that has operated twice before in its history. It has produced about 3.5 million ounces of silver at very high grades, around 20 ounces per ton. It’s really a polymetallic ore body because it has quite significant amounts of copper, lead, zinc and tin associated with the silver. So far, we’ve only done minimal drilling at Conrad, but we see great potential for extensions to the mined lode at depth, extensions to the southeast, and repetitions elsewhere in the property. I think the thing about Conrad is the high value of the ore. If you take today’s metal prices, the historic grades of production are worth around $450 a ton. That’s pretty high-grade stuff and we’re aiming to find more just like it.

With regard to Elsmore, we went in there when no one else was much interested in tin and we did so partly because we thought the tin/silver association we were recognizing at Conrad, might be repeated at the nearby Elsmore tin mine. We haven’t yet determined whether that’s the case or not, but we’re very happy with what we’re seeing in terms of the tin at Elsmore, where again we have 100% interest. We’ve begun evaluating the alluvial deposits at Elsmore with a view to restarting the operation that was suspended in 1989 and we’re also testing the hard rock underlying the alluvial deposits for the possibility of primary tin deposits. What we would like to do in the case of Elsmore is reopen the alluvial operation to generate cash flow, to fund our exploration activity there and elsewhere. The good thing is that while we’ve been doing this, the price of tin has been rising almost vertically lately and is currently sitting at 15-year highs. That is generating quite a bit of interest in what we’re doing at Elsmore, particularly from Asia where the tin industry is closer to home. So those are our core projects and that’s the current status of them. We’ve got other things in the pipeline but those three are the important ones to us at present.

WSR: What is unique about Malachite Resources, what differentiates this company from others in the industry?

MAR: Firstly, it’s the fact that we are focused in terms of commodities and very focused geographically. We concentrate on eastern Australia. As you’re probably aware, many of the Australian juniors are working in Western Australia and there is this perception that that’s where all the gold is, but in fact that’s not the case. New South Wales is the second biggest gold producer in the country. So we are very focused on New South Wales and to some extent Queensland. We are very keen to realize the under-explored potential in this part of the country. We’ve kept our capital base quite tight, so it leaves plenty of room for leverage to a new discovery. And we’ve done it before.

For example, I had a very strong hand in the discovery of two of the largest modern discoveries in New South Wales ? the NorthParkes copper/gold and the Lake Cowal gold deposits. Both are big porphyry systems. And we’ve gone into a new area where previous exploration is minimal, so we’ve got a chance to find something really new. We’re not just rehashing old ground, like quite a lot of our colleagues in the West are doing. Also, I guess we offer exposure to three of the hottest commodities in the market at present, namely gold, silver and tin. I note this morning that silver has just gone over $8 for the first time in many years, so I think we’re on the right track there. And our core project, Tooloom, has stirred up a lot of interest in the industry here, and several of the largest players are queuing up to participate. So reasonable success in the forthcoming drilling at Tooloom could really see our stock completely re-rated on the ASX, as happens when a junior like us makes a major discovery.

WSR: What can you tell us about the key players on board here, the present management team in place at Malachite Resources?

MAR: Basically we are a small company with a small team of people, my colleague, Russell Meares, who is exploration manager and myself. We’ve worked together over the years before Malachite, also in the last six or seven years here. We’ve both had a long history of hands-on exploration across Australia.
We work well together and I think in each case, we’ve had a strong hand in significant discoveries. The important thing perhaps to appreciate too is that we have all this experience, but what we don’t do is sit here in the office and send the new kids out to do all the hard work in the field. I really believe that the most effective prospecting tool remains the most experienced eyes you can put into the field. So we feel it’s very important that we, who have all the experience, are out there looking at the rocks and really trying to understand what we’re seeing on the basis of many years of experience.

In fact, it was my experience in porphyry systems in Australia, in the southwest United States and in the southwestern Pacific, which told me that Tooloom was something special when I first saw it. I went into it without any prior knowledge or information, but as soon as I got on the ground I could see there was something pretty special going on. So I think what we emphasize is that the people who actually have the most experience are the ones really very much hands-on on the ground, doing the work. Then we have a small team of very competent geologists who are working for us in the field as well. All with a strong sense of the need and the excitement of making a discovery and we’re sure that that’s what’s going to happen.

Our board is a small board, five people, three non-executive directors, Russell and myself as executive directors. We have a good board. It’s got financial and legal expertise and more technical expertise as well, so we are able to draw on their assistance as necessary. I think the strength of the board is that we are all experienced in the industry and we have a broad range of contacts that has brought a lot of investor interest into the company. One of our directors used to manage a major multi-billion-dollar fund and through that role is very well known, and has a lot of contacts in the investment community. So for a junior, we have three significant corporate investors, BHP Billiton I mentioned, with 6%, and Straits Resources with just on 5%. We have another company, called MacMin Silver, with about 4%. We also have several institutions and the top 20 hold about 45% of the company.

WSR: In closing, let’s recap a bit. Why should investors consider Malachite Resources as a long-term investment opportunity?

MAR: I think the key thing is that we are very focused and we represent something quite different from most Australian resource juniors. We’re eastern Australia focused, concentrating on properties in this part of the country. We’ve done it before in terms of our own previous exploration/discovery history. We know what business we’re in; we know that, for example, in the mining industry value curve, the steepest part of that curve is actually the discovery process and that’s right where our business lies. What we’re seeking to do is to make the discoveries and then once we’ve created that value, farm them out, that is pass them on to a major company for development. Our shareholders will see the benefit of that very steep rise in value between initial prospecting and major discovery. We’re in the right region; we’re in the right commodities. Australia is very stable economically and politically, and we own or have the right to acquire 100% of everything we’re in. So we’ve got lots of room to leverage our interests later, when we start to bring in joint venture partners.

I think the key thing is that in the next few months, Tooloom is going to really re-rate this company. We know the exploration business is risky, but it’s a lot riskier for some than it is for others. Not all prospectors are the same, so we think that our risk is rapidly diminishing and our reward is fast approaching. I guess in just a few months we’ll know one way or the other whether our optimism is justified. If it is, we will be strongly re-rated and we will be sitting on a multi-million-ounce resource. With a small capital base now, that leaves room for lots of leverage for our shareholders.
END
There is a link to the audio as well:
http://www.wallstreetreporter.com/linked/MalachiteResources.html#Trancript

Good luck to fellow owners,
Cheers,
Carl.